Orora (ORA) $3.20 as at 10/10/2019
Japanese firm Nippon Paper has pulled together $1.7b today to buy Orora’s packaging unit, sending ORA shares higher early in the session, helping to overcome of some of the pain seen after the full year result in August. The sale represents a EV/EBITDA multiple of around 11.5x according to the announcement, which compared to the ~8.5x the stock was trading on as at yesterday’s close hence the rally in share price today.
The deal would see Orora realise around $225m in net gains after tax on the business, while receiving $1.55b in cash after expenses. The statement said the company “intends to return in the vicinity of $1,200m … to shareholders, in the most efficient way through capital management initiatives” with the remainder being used to reduce leverage on the balance sheet.
The sale will leave Orora with their Australasian beverage and broad North American businesses with the company saying it does not expect any meaningful loss in synergies as a result of the sale.
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